Market optimism high after first trading day of year as players wait for leads from US Stocks edged higher on the first trading day of the year and dealers said hopes had firmed for a rally before the Lunar New Year. 'Given the performance, the market appears optimistic,' said Kyle Stewart, the head of cash equity trading at Citigroup. He said the market might reach the 15,500 level before the end of the month. 'If we get a reasonable performance from the US overnight, there is also a good chance that the market trades back above the 15,000 level,' he said. Andrew Clarke, a sales trader at SG Securities, shared the optimism for a testing of the 15,500 level before the month ends. 'Investors are hoping for a property recovery, but there is also an element of buying on hopes of a rally in the coming New Year,' Mr Clarke said. The Hang Seng Index gained for the first day in four. The blue-chip index opened 0.21 per cent lower but quickly recovered after about 20 minutes. It finished the day 68.34 points, or 0.46 per cent, higher at 14,944.77, just 0.28 point off the intraday high. The H-share index outperformed the blue-chip index, ending 82.65 points, or 1.55 per cent, higher at 5,412.99. The index hit its highest level in more than four months. China stocks outperformed broadly in the market. The top three gainers in the benchmark index all have a clear mainland focus. China Merchants, which operates ports and toll roads in the mainland, surged 3.85 per cent to $17.50, leading the blue-chip gainers. It was followed by China Resources Enterprise and China Unicom, which finished 3.24 per cent and 3.17 per cent higher. H share ZTE jumped 8.62 per cent to $28.35 without any company-specific news heard in the market. An analyst said ZTE, China's largest handset provider, would benefit from the launch of 3G mobile-phone services in the mainland. Mr Stewart expected any future gains in the index to be led by telecommunications plays, particularly wireless, as they do not suffer from the same interest-rate concerns as banks and property stocks. The mainland mobile sector also outperformed. China Mobile rose 1.08 per cent to $37.10 and China Telecom gained 0.87 per cent to $2.875. China financial stocks also rallied. Bank of Communications was the biggest riser, after reports China's banking regulator may relax investment restrictions on the mainland lender. The country's fifth-largest bank rose 2.83 per cent to $3.625. China Construction Bank climbed 3.7 per cent to $2.80. Ping An Insurance rose 4.54 per cent to $14.95. PICC Property and Casualty leapt 4.49 per cent to $2.325 and China Life Insurance marked a high at $7.10, before settling 2.91 per cent stronger at $7.05. 'The market will continue moving its focus towards China stocks as concerns with interest-rate rises are still pushing back rate-related stocks such as property firms and banks,' Mr Clarke said. Francis Kwok, a director of Peace Town International, said that 'speculation of yuan revaluation and the launch of qualified domestic institutional investors will give support to China counters' but noted that the property counters might recover soon at current valuations. 'The property stocks were oversold after diving 10 per cent to 15 per cent from their peak last year,' he said. Property stocks also made gains. Cheung Kong edged 0.37 per cent higher to $79.85 and Sino Land rose 1.06 per cent to $9.50. Henderson Land rose 0.13 per cent to $36.55 but Sun Hung Kai Properties remained unchanged at $75.50. Mr Kwok projected the market will be soft and rangebound for the next three days as the benchmark index was trading technically below the 10 and 20-day moving averages but above the 50-day average. However, it was unlikely to drop below the technical resistance level of 14,800. Market turnover dropped 9 per cent to $16.83 billion, slightly lower than an average trading day. The spot month Hang Seng Index future ended at 14,950 points with 28,507 lots changed. The futures contracts were at a slight premium over the cash market.